Wage theft makes up the major part of all theft in the US [1]. At least some part of the value of companies is coming from this theft. As an example, look at Amazon and how they treat their warehouse and delivery workers. They're not just working them like this for the sake of it, but rather it's an example of concious wage theft in order to save money and, thus, increase the value of the company.
1: https://www.tcworkerscenter.org/2018/09/wage-theft-vs-other-...
I'm arguing that underlying issues like this need to be fixed.
The question then is: why does this happen, and how do we fix it? There are broadly speaking two options: either the economy is performing poorly and not generating enough wealth for everyone to thrive, or it is generating enough wealth, but the spoils are being distributed unequally. The fact that we have huge inequality points to us being in the second situation, and the solution is, accordingly, redistribution.
As an aside, I'm quite curious what you mean by "underlying issues".
I don't believe everyone needs a new iPhone every 12/24 months (or even one at all), or a 2000 sq ft house to themselves, but everyone does need food, shelter, affordable healthcare, and again I'm open to the argument for education.
I bring these points up primarily because there are ample examples of people from the FIRE community (financial independence retire early) who live on a minimal income but save and are able to retire early. In my opinion, they're able to save more simply because they focus on only buying what they really, truly need. And they're able to resist advertisements that attempt to convince them a want is a need. Many of the crazy successful examples from the community are dual income 6 figure earners, but there are examples of teachers retiring early by living frugally. One of the interesting things of capitalism is it's convinced society that many wants are needs. If you can outsmart society, you can profit/benefit.
I agree redistribution is what's needed, but where I disagree is on the how. I'd rather see more opportunity given instead of reward taken. I don't think a lack of government funds is the issue.
> As an aside, I'm quite curious what you mean by "underlying issues".
At a high level the problem that I think we'd agree on is more people need to be able to cover basic needs. Housing, food, healthcare, and arguably education. I'm not an expert in any one of these, but I have worked with hospitals before. There's a massive amount of resistance to change within hospitals. They move and innovate (and as a result improve) extremely slowly. They're very inefficient (25% of hospital costs amount to waste [2]). I'd argue this is one underlying issue under the umbrella of the "healthcare" issues. I don't wish to propose a solution--because I honestly don't claim to have one. There are some arguable reasons for why healthcare moves slowly--extreme risk aversion. But I think that's why we employ politicians with our tax dollars--to propose and implement solutions. A failure to fix these issues is a failure of our politicians, and since we vote them into office, a failure on our part.
Just as another example, I've been told that permits alone to build a home in my area cost ~35k. I've also been told that about 50% of construction costs (or perhaps it was only construction labor costs?) end up going to taxes. I don't have any sources to back this up--just heard from various sources I deemed semi reliable.
[1] https://compasscaliforniablog.com/have-american-homes-change....
[2] https://www.newsweek.com/us-wastes-25-healthcares-spending-1...
The underlying problem is that the economy is breaking basic macroeconomic equations, namely that savings must be invested. A wealth tax would force such an outcome. This is unpopular for republicans. Government investment would force such an outcome. It's still unpopular for republicans. Building more houses would force such an outcome, it's unpopular for democrats. Deeply negative interest rates for consumers would force such an outcome except that cannot happen because people will just hoard cash.
I can list more and more things. The pattern is clear, all the options are disappearing and we are left with nothing to do. The reason why economics doesn't work isn't that the textbook is wrong, it's that people come up with more and more sophisticated ways to prevent the textbook rules from functioning.
This money is effectively lent to the bank, which will then re-lend it. A small share to the Federal Reserve, the rest to mortgage holders, businesses trying to meet payroll and so on.
An action doesn’t have to be illegal for us to condone it. Do you like income inequality? No? Then let’s take measures to stop it.
People need to be able to cover their needs. Food, housing, healthcare, and I'd be open to arguments in favor of education. But I don't see income inequality as bad necessarily. I see massive amounts of people unable to cover those needs as bad. Fix the problem that people can't cover their needs--not that fact that some fortunate entrepreneur got richer faster than me.
There is an essence of truth to that, but it certainly does not tell the whole story.
Consider what happens with Amazon. When they put a family-owned store out of business, those people need to work somewhere. They then turn to the only place left that has any jobs in their area: the Amazon fulfilment center. They then get a minimum wage job there. It is clear those people have directly lost wealth as a result of Amazon.
In some cases the "creating wealth" argument holds up, but in reality what is mostly happening in the age of globalism is wealth consolidation, not wealth creation. Amazon is not creating new wealth, they are simply taking all of the customers and wealth away from all of the smaller businesses and consolidating it into a single huge entity.
This obviously has strong negative consequences for the people who are losing wealth. There is a reason wages have remained stagnant for over 50 years while corporate profits keep on growing to record highs.
I get where you're going with this... and I'm not in favor of monopolies and anti-competitive behavior... but Amazon is a hugely innovative company, and I do not believe that they've merely consolidated wealth without creating any. Think of just AWS as an example and all of the companies (and their employees) who've created more wealth as a result of it.
It is important to realize the effects that this consolidation has in terms of wage stagnation [1]. This is a very real effect that is felt by a very large percentage of the workforce. By consolidating wealth (and power) in the hands of few large companies those companies are able to pay a lot lower salaries to their employees. If your options are (1) work for Walmart for a low wage, (2) work for Amazon for a low wage, or (3) starve, you will accept whatever wage Amazon or Walmart will offer you.
In other words, as a direct consequence of these multinationals and their mode of operation, millions of people are getting lower salaries today than they would have gotten 50 years ago (adjusted for inflation) whereas overall productivity has gone up significantly. The difference is pocketed by executives and wealthy shareholders of these companies. As a result of those lower salaries, those people are now having trouble paying for core necessities (health care, education, housing).
This is the rising wealth inequality that people are talking about, and the rising wealth inequality that people want to fix.
[1] https://insight.kellogg.northwestern.edu/article/wage-stagna...
Amazon doesn't "simply" take others wealth. It wins by providing a better service
https://www.bloomberg.com/news/articles/2020-07-29/amazon-em...
And offering new, but delivering used, damaged products to customers:
Yes, there is. It is not limited, we can do more of it, but of course it is finite. It is also important that, the more wealth you have, the easier it becomes to make more of it. So, indeed, the rich obtaining more of it does mean there's less for you and me.
Even if I had to buy the wood from someone else, I took a $1 piece of wood and turned it into a $20 spoon. Wealth was just created without anyone loosing it. Wealth is infinite. Sure the amount of currency in circulation is finite, but currency isn't wealth.
> It is also important that, the more wealth you have, the easier it becomes to make more of it.
I agree--once you get to the point that you can make your wealth make more wealth for you, you've hit the point that you can scale beyond your time. Generally speaking having your wealth make more wealth requires investing your wealth, which is a good thing.
> So, indeed, the rich obtaining more of it does mean there's less for you and me.
This simply isn't true. See wooden spoon example above.
If you use the wood for the spoon, it means someone else cannot use that wood for making a ship or heating their house. You cannot go and make a million spoons to get rich without either having money to invest or breaking a few laws. And this happens because the amount of wood (or resources, in general) is not only finite but relatively scarce.
We have gone down a rabbit hole, and it sounds like you (and I too) no longer wish to dig any deeper. The point is when the rich get wealthy it doesn't demand the non-rich to get more poor.
Not strictly true with fractional reserve banking
Even if the pie keeps growing for everyone, the rich are taking a bigger and bigger proportion of the pie, and proportion is what makes you poor. If I have 10% of a $10M the pie today and you have 90%, and tomorrow I have 5% of a $20M pie and you have 95%, then you have proportionally taken from me, and I am worse off, despite having the same absolute dollars "pie equity".
How do you look at this history and think the right way to approach it is as a fight over who gets what part of an existing pie? That was the standard conceptualization in the beginning! It can't be the key to the 50x change. The recent headwinds against equality have also been a period of relative stagnation in productivity growth. Shouldn't we look really earnestly into how the hell progress happened in the first place?
Yes, we also have a big problem in that poverty should not exist in a society this rich. But this is genuinely a first-world problem. Job 1 is to not screw up what got us here in the first place.
What matters is purchasing power.
Non invested savings are zero sum. This is just macro economics. If one person has a savings surplus, the other person has a savings deficit (unemployment). Buying existing housing isn't an investment. Building new housing is. Buying an existing company isn't an investment. Starting new companies or growing old companies is.
Non invested savings are growing, just look at treasury bond yields and interest rates. If you buy $100 worth of treasury bonds the government has to issue $100 in debt, otherwise yields drop. If the government doesn't issue additional debt it cannot invest the additional money on behalf of buyers of the treasury bonds. Conventionally, inflation would rise immediately because more money is circulating in the economy but it doesn't, implying excess savings that are not being invested.
yes it is - because the person you're buying it from now can invest the proceeds of that sale (to something else).
Buying shares off the sharemarket is investing - not because you're directly giving the company your money, but because your buying is the end of a chain of investment that directly leads to the IPO at the other end. Same with housing.
Your way of seeing only direct investment as "true" investment is too shallow, and lacks the actual nuance of how the financial markets operate. If you sell your shares to somebody else after an IPO, the IPO might not ever have happened, or that the raising of money costs more (to account for the risk of having to hold the bag till the company profits). By strata-ing the risk out to different people, the financial market allows all levels of risk to be bought, by all manner of different people.
The direct "investment only" method is as primitive as bartering for goods/services.
A degree of struggle is good for us. It pushes us to become more than we could without it. Don't take this to mean I want everyone in poverty--that's not what I'm saying. But being motivated to work towards a financial goal is a good thing. I do not believe a life without struggle is a good life.
There are struggles outside of financial struggles too. So I understand that even if you remove the financial struggle by giving everyone the same amount of money some struggle will remain from other factors in life. But in general I've found I grow the most in difficult times. It's painful. But it's richly rewarding when you come out the other side of the struggle. Robbing life of struggle will rob you of a rich life.
I'm not arguing we need to increase the payout. Letting more people play is exactly what we need. I'm simply arguing that people winning more isn't what's preventing people from playing.
Second. If you have 1B to invest, and I have 1k to invest and we both invest... there is no stealing, and you're getting richer much faster than me. Now you're not to blame for having that money, or investing it, but it is undeniable that the wealth inequality between the two of us is only ever going to grow, all things equal.
Third. Ever heard of lobbying? Who do you think lobbies and for what purpose? Hey, Let's use the free market and have people pay as much as they can for insulin. Let's make it legal to do that. Let's say that's 500€/month. Welp. A poor person just lost half their monthly savings. A rich guy? Barely a blip. You know who's also a rich guy? The owner and co. of the company of makes insulin. Where is the stealing?
Cmon. Saying that unless there is stealing then it's ok is so uninformed I have no words for.
It is not. Ownership, wealth, money is an outcome of processes of the government -- like the existence of police and military, and that the majority of the population (in a democracy) agrees to only the state having a monopoly on violence, and agreeing on who owns what.
In a democracy, one asks everyone to agree a) that violence is monopolized, b) to protect ownership.
If wealth is then superconcentrated -- why would that work? Why would or should most people participate in that specific social arrangement?
A problem with capitalism without any form of wealth tax is that it is fundamentally unstable mathematically -- those with a lot already have more opportunities to get even more, making wealth more and more concentrated.
Without wealth tax, there is no stabilizing force.
This is about mathematics more than right or wrong. There just isn't a way a system that only concentrates wealth can keep working without mechanisms to redistribute wealth.
At some point, majority of people are slaves or starve and there isn't a way for that economy to progress further.
This is not hyperbole... it is human history. Historically, devastating wars and/or revolutions have been the mechanism to reset wealth distribution and happen all the time.
Tax on wealth isn't about "fair vs unfair", it is about whether one wants to construct a system that can be stable over more than a few hundred years.
So in other words, don't try to paper over the flaws of capitalism by instantiating a welfare state from taxes; instead abolish capitalism directly?
Probably not what you meant, but it could be read that way.
For example, waste is estimated to account for 25% of healthcare costs. I've worked with with hospitals, and they do things incredibly inefficiently due to all sorts of bureaucratic and political nonsense. There's a massive amount of resistance to change. I believe they're allowed to get away with it primarily because hospitals generally aren't allowed to fail. I'm not arguing we need to close up hospitals, but something needs to change there to encourage improvement.
Someone who builds a company worth 100m didn't have to steal money from me (or anyone else) to do it. If they did steal, then that's what needs fixed. Prevent the stealing.
The individual who has 100k to invest can watch that 100k grow if they invest wisely over time. They can pile the earnings on top of their savings from their salary, and get richer faster than someone without the 100k invested. The rest of us who don't have 100k to invest don't see that same benefit--but merely because the 1% chooses to invest and to watch their money grow isn't a bad thing. Now if they're doing corrupt things with that money, then yea--fix that.
This concept of a wealth tax "fixing" income inequality is folly. It won't fix anything. It's at best a band-aid attempting to treat a symptom caused from underlying issues. We need to treat those underlying issues--not the symptom. Wealth tax happens to garner a lot of support though because many of the 99% love the idea of receiving something for free that's taken from the 1%. But it's not the governments job to legalize theft and pick the winners and losers, it's the governments job to fix the underlying issues.